Jan. 24 (Bloomberg) -- International Monetary Fund Managing Director Christine Lagarde said that the construction of a “firewall” to prevent the region’s sovereign debt crisis from spreading is necessary to restore confidence and boost growth in the region.
Speaking on France 2 television in Paris, Lagarde said that Germany can be convinced to help construct such a mechanism if other countries accept budget discipline.
Germany “expects, in return, real efforts on the part, notably of Greece, but also of other countries in difficulty,” Lagarde said. “There is a need for discipline, sanctions, automaticity to all that. There is a need for a sort of European fervour for budgets to be constructed on solid bases. Given all that, Germany can understand that defense counts too.”
Lagarde also said that banks are being re-capitalized across Europe, though that strengthening of balance sheets must not be done through providing less credit to the economy.
To contact the reporter on this story: Mark Deen in Paris at firstname.lastname@example.org
To contact the editor responsible for this story: Mark Deen at email@example.com